S&P cuts six U.S. homebuilders to negative, lowers Comstock

Standard & Poor's said it recently concluded its quarterly review of U.S. homebuilding companies, which culminated with outlook revisions on six conventional homebuilders to negative from stable and the downgrade of a seventh company.

Turmoil in the subprime mortgage market contributed to a disappointing spring selling season during the quarter and further compounded our concern that consumer skepticism and tighter lending standards will prolong the absorption of the excess supply of homes currently listed for sale, the agency said.

S&P noted that its recent review focused on key credit factors, including inventory and cost structure, profitability, balance sheet strength and liquidity.

The companies that were most negatively affected this quarter tended to have longer land positions and/or excessive speculative inventory, the agency said.

Affected companies include Centex Corp. (BBB/negative/A-2), D.R. Horton Inc. (BBB-/negative), Hovnanian Enterprises Inc. (BB/negative); Kimball Hill Inc. (BB-/negative), Pulte Homes Inc. (BBB/negative) and William Lyon Homes (B+/negative) as well as Comstock Homebuilding Cos. Inc., which was cut to B from B+.

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